Case study negative equity, debt starting to mount

Buncranagirl

Registered User
Messages
1
Income details
Net Income self: 3970
nature of income :semi state
Income history: I am permanently employed in a semi state. Since may 2010
Personal circumstances so we can calculate your reasonable living expenses
One adult
Do you need a car for work or do you use public transport?
I need a car to commute from mortgaged house in Sligo to rented apartment and work in Cork
No Children
Monthly spend on special circumstances:
Rent on apt in Cork is €450 pm, €200 per month on essential medical treatment

Home loan
Lender: EBS
Amount outstanding: 250,000 term remaining 29 years
Value of home: 70,000
Interest rate: fixed 5.65 for another 3 years
Monthly repayment should be 1,460, am only managing to pay about 1,200pm
Amount in arrears 3,500

Summary of discussions and agreements with the bank.
Asked for a split mortgage and was refused .
asked to go onto variable interest rate but the penalty amount would have negated the benefit of doing so
Had 2 short periods of interest only and told no more available




Credit Union
Amount of shares 1200
Amount of loan outstanding 8000
Monthly repayment 360
Term left 3 years
Overdraft – 1,000
Personal loan to be repaid to a friend 27,000. It’s on the long finger, no repayments .

Other savings and investments NONE
Do you expect any lump sums in the medium term future? NO

How important is retaining the family home to you?
I would like to keep it, but will get rid of it if it means I can get rid of the mortgage associated with it.


Any other relevant information
I have a house in Sligo but took a job in Cork in summer 2010 as it was almost double my previous income and I was led to believe that a transfer back to Sligo would be forthcoming in a couple of years. The transfer policy has evaporated and I have been told to expect to stay in Cork for the remainder of my career. Then my intention was to sell the house in Sligo but obviously I am in massive negative equity and the house is in an unfinished estate with empty foundation sites beside my house so it is not even remotely attractive to buyers. I rent an apartment in Cork for €450 per month. I am paying 2 esb bills, 2 heating bills. I have to commute back to the house on my days off because it has started to be vandalised, oil stolen, rubbish dumped in garden etc. I tried to rent it out but again because it is in an unfinished estate the health board refused to use it and private renters won’t come near it. There is extra expense attached to all the commuting between Sligo and Cork.

What is your preferred realistic outcome?
I would like a split mortgage or sell the house with some debt write down. I have no attachment to it and would be delighted to be rid of it. I would appreciate any opinions on my options .
 
I dont see the problem. You earn 4k a month so you can easily afford this mortgage. I dont believe it is unrentable. Get it cleaned up and rent it on the private market for 250 per month. Stop commuting back to sligo and trying to run two households.
 
I do see the problem. You are pumping in €1200 a month into a property that is worth almost 4 times less than you paid for it. If the housing estate is as bad as you say it is, and it is impossible to rent, I feel for you and this sounds like an unsustainable situation.

If it were me, I would probably stop paying the mortgage, concentrate on setting up my new life, and seek legal advice immediately. Some might say it is wrong to purposely default on the mortgage, but you have to live.

By the way I have no legal or financial background, that's just my opinion. You should of course carefully consider all options.
 
Shes plenty of incomr to live on.its just another example of someone who feels they should be able to escape a bad decision without repercussion. As previously suggested get it rented out
 
OP, the bank is not concerned with your personal situation. They are only concerned as to whether or not you can repay your loan. The fact is that you can.

You have one loan (the friend one doesn't count as far as the bank is concerned) that is repaid in 3 years giving you an extra 360 per month.

You are semi - state, meaning job security and pay rises down the road.

If you are paying a pension then you have a lump sum pension down the road.

In other words - you are good for this loan.

Your outgoings are 2,210. Plus two ESB/Heating bills for an apartment and a vacant house - 150 per month?

You say that it costs money to go up and down to the house, could you not ask some friends to pop over once a week each and check on it?


Without your car expense you still have over 1,600 per month.

You are 3.500 in arrears and the reality is that you shouldn't be. You can sort this out very easily.

I would honestly say to you keep paying your mortgage, try to overpay that CU loan and when it's done then go to the bank and ask about a NE mortgage which could enable you to buy a new home in your new base.

If you can prove repayments on the mortgage as well as paying rent then this could be a solution for you.
 
I would get someone you know and trust into the Sligo house for very cheap rent. It's madness to be leaving it empty and having it cost you in bills and commuting costs.
 
You say that it costs money to go up and down to the house, could you not ask some friends to pop over once a week each and check on it

I would honestly say to you keep paying your mortgage, try to overpay that CU loan and when it's done then go to the bank and ask about a NE mortgage which could enable you to buy a new home in your new base.

If you can prove repayments on the mortgage as well as paying rent then this could be a solution for you.

+ 1. Good advice there

As said also by Sarahmc, get someone in there to look after it so it's not costing you money. Unless the estate is in a terrible state altogether, someone will always be prepared to rent if the rent is reasonable. That would give you some income toward repayments, and eliminate most of the standing cost of this property from you, incl the travel expense.

Assuming you have surplus money each month, you need to address the mortgage arrears. If you don't have a surplus, then you should look at your outgoings and see where expense can be saved.
 
Shes plenty of incomr to live on.its just another example of someone who feels they should be able to escape a bad decision without repercussion. As previously suggested get it rented out

Why so many people have this opinion is beyond me. Ordinary people bought property in a bubble caused by developers, the government, and bankers. Whilst most of them get off scott free, and developers have millions written off, the rest of us are expected to foot the bill? I'm not saying everyone should strategically default on their debt, but there are certain hopeless cases where people deserve help. Look at how Iceland treated people in negative equity.

I assume these type of unhelpful comments are from people not in this position.

There is a suggestion that the OP should aim for a negative equity mortgage. I fail to see how when the negative equity is so great here.
 
Why so many people have this opinion is beyond me. Ordinary people bought property in a bubble caused by developers, the government, and bankers. Whilst most of them get off scott free, and developers have millions written off, the rest of us are expected to foot the bill? I'm not saying everyone should strategically default on their debt, but there are certain hopeless cases where people deserve help. Look at how Iceland treated people in negative equity.

I assume these type of unhelpful comments are from people not in this position.

There is a suggestion that the OP should aim for a negative equity mortgage. I fail to see how when the negative equity is so great here.

The NE is irrelevant. The OP can afford to repay the mortgage. That's all that concerns the banks.

The OP has doubled her income since she took out this mortgage prior to 2010.

This is not a hopeless case.
 
Back
Top